It isn’t every day that 11 giant banks infuse $30 billion into a smaller one to try to keep it afloat. But even that bailout, the first of its kind in at least a decade, doesn’t appear to have allayed fears that the banking system will emerge unscathed from its first major stress test since the 2007-09 financial crisis.
The company getting that $30 billion, First Republic Bank (ticker: FRC), has turned into a sort of firewall against more stress to the system triggered by the failure of Silicon Valley Bank, or SVB. As of Friday, the markets weren’t convinced it would work. First Republic’s stock continued to slide, falling more than 20%. Big banks that had led its bailout, including JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC), got dragged down, along with regional banks facing concerns about their stability.